- Passport fees in Zimbabwe will continue to be charged in foreign currency
- Yet the government is coercing the public to use ZiG for transactions through statutory instruments, and police force
- This formal exclusion of ZiG raises concerns about the confidence and stability of ZiG
Harare- Zimbabwe's economic landscape is currently dominated by discussions surrounding the introduction of a new currency called Zimbabwe Gold (ZiG), which the government claims is backed by gold and US dollar reserves.
However, the stability of this currency is still uncertain as the government shows no signs of faith in own currency.
Despite calls from economists and economic agents to expand the use of ZiG in essential services such as fuel, passports, and licenses, the government recently announced that ZiG would not be accepted as payment for passports.
The government's reasoning behind this decision is that they have a contractual obligation with a Lithuanian company that assisted in establishing the electronic passport system, and therefore passport fees must continue to be charged in foreign currency.
However, the government is actively pushing for the public to use ZiG by employing statutory instruments, and even resorting to police force to enforce the mandatory acceptance of ZiG and its conversion to foreign currency at banks when foreign currency is required.
This raises the question of why the government cannot collect revenue in ZiG and then obtain US dollars from the banks to pay the Lithuanian company, as it expects everyone else to do.
If the government is urging companies, including private ones, to pay salaries in ZiG, where are the applicants supposed to acquire US dollars to pay for passport fees if not from the black market?
The lack of consistent and transparent policies remains a significant hindrance to the country's economy. This inconsistency signifies a lack of confidence in its own currency, which the government is forcefully imposing on the public.
If the government itself cannot accept passport fees in ZiG and acquire US dollars for payment to the Lithuanian company, how can an ordinary citizen be expected to find US dollars to pay for passport fees, other than resorting to the black market?
In previous discussions, we have emphasized that the government should not only abandon the practice of pegging the official market rate for ZiG but also prioritize the implementation of a genuine multi-currency system.
A multi-currency system would treat all currencies equally in terms of payment acceptance, thereby strengthening ZiG and boosting its demand.
However, when essential services such as passports, fuel, and licenses cannot be paid for in ZiG, it creates a high demand for US dollars, which the banks are unable to provide.
Consequently, the public is forced to seek US dollars through the parallel market, where prices are inflated making the ZiG worthless.
This situation compels everyone to follow the government's stance and exclusively charge in US dollars.
Couldn't the government, through the Reserve Bank of Zimbabwe, allocate the US dollar equivalent to ZiG and charge citizens in the local currency?
This inconsistency raises doubts about whether the reserves are even sufficient to support the currency in the first place.
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